The decision will be appealed, according to Mat Staver, founder and chairman of Liberty Counsel.

Liberty Counsel filed suit in U.S. District Court for the Eastern District of Virginia that the designations, which were eventually taken down, violated the Lanham Act — which prohibits false or misleading descriptions of fact or representations of fact in a commercial or advertising promotion or misrepresents the nature of one’s goods, services, or commercial activities. Liberty Counsel was arguing that that the hate-group designation were made in reference to the organization’s services and misrepresented the organization in an effort to influence donors’ decisions.

In granting GuideStar’s motion to dismiss, Judge Raymond A. Jackson ruled that “The Court finds that Plaintiff has not sufficiently pled a claim for a violation of the Lanham Act. Plaintiff did not sufficiently plead facts to satisfy the first element of a Lanham Act violation because the Court determines that Defendant’s statement is not commercial speech . . . The Court finds that Defendant’s use of SPLC’s notation is not commercial speech because the notation does not fall under the type of speech that violates the Lanham Act. Defendant’s review of Plaintiffs organization would fall under the laws of the First Amendment, not that of the Lanham Act.”

Reached for comment, a GuideStar spokesperson said ”We think the judge ruled correctly in this case.”

Staver told The NonProfit Times that the organization plans to appeal the case to the United States Court of Appeals for the Fourth Circuit. Staver opined that the opinion lacked thorough analysis regarding the the Lanham Act and that GuideStar’s flaggings were intended to harm Liberty Counsel. Liberty Counsel has lost potential donations as a result of the designation, Staver said, offering the example that Prudential Insurance no longer offers employees matching donations made to Liberty Counsel.

“GuideStar’s republication [of SPLC’s hate groups] intended to have a commercial impact on Liberty Counsel,” Staver said. “They had a commercial motivation to inflict a commercial harm by reducing the amount of donation and [harming the] reputation of Liberty Counsel.”

Staver said that underlying defamation claims were not considered by the federal court because, without a claim under the Lanham Act, the federal court did not have jurisdiction over the tortious claims. In addition to seeking an appeal in federal court, Staver said that Liberty Counsel might pursue the defamation claims in state court in Virginia.

SPLC was not named in the federal suit and there is no imminent litigation involving it. Liberty Counsel continues to consider suing SPLC over the hate-group designation either as an individual party or on behalf of itself and others, according to Staver. Liberty Counsel is currently working with representatives of between 45 and 60 organizations that were also designated as hate groups.